Highlights:
- FTX paused repayments in 49 countries, awaiting legal clearance to ensure regulatory compliance.
- Over 82% of the disputed claim value comes from China despite the crypto ban in 2021.
- Creditors have 45 days to object after receiving the Restricted Jurisdiction Notice from FTX.
The FTX has triggered a legal hold against all creditor claims in the 49 countries with restrictions on crypto. The move is a response to a court filing on July 2, which has introduced a formal process of hold-and-review. The exchange will analyze every disputed claim by considering local laws before the disbursement of the funds.
As FTX creditor advocate Sunil Kavuri explains, these impacted areas only comprise 5% of overall claims. However, a staggering 82% of the frozen value is tied to Chinese users alone. FTX has now requested that the court start issuing “Restricted Jurisdiction Notices” to all parties affected by the issue. The notices will specify the cause of the freeze in the claim and provide the user with at least 45 days to protest it. The company made it clear that only the people in the compliant jurisdictions will receive the payout, subject to legal approval.
FTX: Restricted countries
Disputed claims49 Jurisdictions -5% allowed claims in restricted countries 82% of value in China
Due to local laws that 1) crypto currency trading is not permitted or 2) distributors not allowed pic.twitter.com/wCEfAOFyaD
— Sunil (FTX Creditor Champion) (@sunil_trades) July 3, 2025
China Emerges as FTX’s Biggest Legal Challenge
China prohibited trading in crypto in 2021, but a large number of its residents traded through offshore exchanges such as FTX. Small in quantity but huge in value, Chinese users have registered more than 15,000 claims. This group possesses more than $3.7 billion of the frozen money.
FTX has also pointed out the need to consult the law before undertaking any cross-border payments. Once legal counsel points out that the release of funds will be permissible under national and international law, then the claims can proceed. Otherwise, FTX will either protest in court or identify the claim as forfeited. The stalled claims have raised the concerns of legal advocates. Some Chinese users claim that they still have the right to possess crypto and U.S. dollars abroad. However, the platform does not want to complete a wire transfer without legal support.
Yeah definitely makes sense
— Sunil (FTX Creditor Champion) (@sunil_trades) July 3, 2025
In addition, FTX creditor advocates are calling on claimants to ensure they stay informed. They suggest preparing a legal defense or the possibility of transferring claims to jurisdictions where payouts are not prohibited. Still, there’s no guarantee such transfers will be accepted under the current plan.
Legal Opinions Will Decide the Fate of Disputed Claims
FTX’s current approach is cautious and legal-first. The exchange will not process any claim in restricted areas until after lawyers verify that local laws are compliant with the distribution. Disputed claims will remain frozen till the end of disputing.
In the phase of objection, users should provide a sworn statement and accept the jurisdiction of the U.S. courts. In case of success, their claim proceeds further. Otherwise, the contentious sum, along with interest, reverts to the FTX estate. Interestingly, failure to respond within a time frame renders the claimant automatically disqualified from receiving a distribution. These conditions were set out in legal papers filed this month.
The number of disputed claims reduced to $4.6 billion from $6.5 billion. Close to $1.8 billion of that is now authorized, and an additional $2.7 billion may soon be resolved. The amount of claims that have already passed to be distributed is $8.3 billion in total. Still, billions are yet to be released, mostly in locations such as China, Nigeria, Zimbabwe, and Fiji. The outcome now depends on how courts and lawyers interpret local restrictions on crypto.
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